Glide path.

In plain English

A glide path is the preset rule that reduces stock exposure and raises bond and cash exposure over time, usually built into a target-date fund. Each fund family publishes its own path, and the differences are significant. A to path reaches its final mix at the target date, while a through path keeps shifting for years or decades afterward on the assumption the money is spent gradually. The shape addresses sequence risk, the danger that a large decline lands right when withdrawals begin and there is no time left to recover. Because the schedule is automatic, it rebalances without the holder acting, which removes a decision people often postpone.

01Why it matters

Two target-date funds with the same year on the label can hold very different amounts of stock at that date, so the number in the name does not describe the risk.

02The math, step by step

One fund holds 90 percent stocks 30 years out and 55 percent at the target date. Another holds 30 percent at the target date. On a 500,000 balance, a 30 percent stock decline at that moment costs about 82,500 in the first fund and 45,000 in the second, a gap of 37,500 from the glide path alone.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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